Ht Z/D/ 





<5 

* 



vx «V 
O > 


—\/.. v-^V .. V^*/ V 

X c ** 3 .'isifet "V ,* v //' c 





v £» 

*"V 


* <£? ^ - 
^ G * ^ 0 V^V A 

, 0 ^ o ° * c * ^o a^ v . 1 ' * * *%> 

c . o j» *Wz%c *r 

* ^ ^ ** 0 * 


C G vO 

J ■» ^ • fc ’ 

« ,<y & *<S 

«G o 

v „ „ „ *P. 




oV 

\0 v*. 

> $ Vb - ?c; 

O - *-t{Af™'\* 0 ^ 

* 9 f ' * A 0 V <J> * 


O r. s s " /> 

,0* g°"°» r o J> 

C O J* < 

-fr * 



<y * 


t • o /^\ 

a*^ v 
^r\ C^ - * 

° ^ 9 S 

0 A^ V< V 

‘ V \*> 





<\ '• • A ’ 

. 1 ' * „ <^>. 

o V , jQ!Ih3sCw$& - V‘ cr 



* / “» 


u ' * 


V 

o ^ 

^•n*. *S 1 ^.* « 5 °* * , >*’^ 

,' n 0 'V '>'*!^ > .' <,K o 0 

A 0 bf\ * » « « ’ °* *»,-.• j 0 

<>\.jv : . *> V % ,’•», %. . 0 * -» 

v*v 

v , 'V ° a v ^ ° 

A 3 j$r** ^ ° 

*3 '..s* A <. '<>. * 

<f> A „ * „ ^ a\ ^ 


° <?5 ^ 

* r 

y - %. *•'<■>•’ ^° •<?. 

•^- -t- ,vv*. V ; ‘ 

° ^rv C3 

^ yT> b ° 

“ ^ S \ v- V «W 5 |W.* 

a u ^** s4 <y 'o.>* o 

C° ^ 0°- 

* •>*„ *■ , •£, A 




0 



•o ^f. A* 

: ^ s s ■ ~~ 




- ^ o^ 



o V 


/ 1 


*t °o - 

• .K o b 

On 0 0 A > O ^ 

v ^ 

V **'£' -JL V S 

to ,<^ 

^ s 



*1 

^„„ v , .. «5 °o V 

«r ^vU\\NNS^ * K > * 

</a •> • <1 > O < 

t* * • ■ - ” °<. 

% ^ V »> * * °- o 

" ^ <(. *■ .•_ ^ 

A .^ v ♦ 1 
v^'S. v 

m~° - \ ' ' * A 


<i> 


" ^ c 0> f °o -Tt? t • L ' * - ^ r 0 V 0°"°^ ^O A’ 



\0 * -4 O 

$ 4* w v ° <C V b<> 

4* 0* ^ 

A ^ 5 " 0 A "v> 

O' .‘b-. *> V- . 

«^ jv ^ ► 




t * O 


: W 


- •, ^■-.:fb>' / \ 

, 4 ^ t ’ L ' " ^ ^ , 0 ^ o ° " ° - ^O 



- ^ v-^ 

♦ o > • 

> ^ V 

* r\ ^ * 

% '•■•’ A° V' 

o. <) r , s ’-• '. *> 

° <4> [. 

° ^ s s • 


° \^ Vt; V & 

* V ^ - 


o A 



\' <. 'o . S * G 

A& .<■'<», <^- 0^ 

", ° ♦W%5>- ^ C° 

sy_ A K ^ > <t s 

^ rvP 



oK '^o 

\ 0 vG * o O 

^ VaWxvT ^ 

f 0 ' 

■ Xs* :AVti 

^ ^ c 0^ 0--, ^ ”* y 

- ^ ^ *P. 

40, 

ct 

o 


, ^ t, 0 

*••’•’ f° V 

to„ J> ♦ < 

^ b 


• to 
















o •<’ y °* **••* f 0 ' 

^ V %* - ' O O V y • 0 

v ,V °' 



c- °° 

•'• o' 1 ' -'ipy^ * 

<10^ * • 

■Q > w 

^ o 


*b V* 


A 


0' 


*0 


v*X 

V> ^J\ o 

* *■ -yhrs ** 

# . u X 


<*• 



\>%] 


A \ r * » 5 

(A n * G Va 

' \U<$W * C° 


o V 


* ^ K 




s< * 

- ► °fl\ 

4 c> *"j^ICMnv, * n ’ * J* 

* tO •*%vU AN>S> ' V- tf*. a < 777 //\\^ •* <?~ 

iV v * 0 V. \ V ' .. -U s " 0 ^ U • * ' .<b 

► *« Si'. ^ . V %*2e<finL+ %6 v 0 k ***«, ^ \ .. 

*- ,* .Vfifek,'. ^ ^ ,v^ A % ^ ^ v ,** 



SlK ; r /\ \W* v 

' • • * <0 O. 'o . , * f A, 

G 


%> 1 * • * <G 

- ^ rO . 11 • 

.WWV^L ^ *y v/ 

, 





*"S> 

S ^ 

a 'v ••%?■».-. 

O' V ' ♦ * 4 *G o 'o . . - 

r O " c ^ X> ^ . , a ^P 

* .Xossnv - *p f° *• J*!* o 

0 a-x V \Nv\\l! /v> ^ ^ 

0 




.0 


<r nfXU \ \\ 

O >• UV 

V *•-»’ J 

r (~\ (\ v 

•j> 9' 


y * o 




< o. 

0 o -..o’ ,o ; 

V e, 5 * C> 

m - ■ r v 



v ‘-imj / \ w , 



°' , 


l 1 a 



o 


O ^ ‘7 


o V 


* < o 

^ <L k O V ^vyvA-' ♦ r\ 

*■’■ y .. ^ *"■"’ A° 
* *‘*SfeV. %, / / 



-v» <j>y * 

v ^O • 

0 s s V • % 

^ x A °* ■ *s, _ 

'•'.«" ,g n a> 

* ^ .o^ % 

. 'i 


a 0 < 


c 




^ A 

vv 



^ V °fcf; X SS V< V J ¥lil^ ° s SvP vr 
^ J .w/ ^ A s ^ -J 

'°' A ^ <- °>r 

° >3^ C u o 


^ c> 

„ ^ssfnu*r O ^ 

/*• \ ^ 

v *°' ^ v ^v;a c\ 

, ^ev 



O 








v/' ^ 


^ A 




'>*' „-&• 


o V 





••> M 0 


,• 0 o % *^T>' o % 

0 *<’ -v °^. 




• ♦ 



A 

- *r 


V % 

P ^ O * 

° ^/V 

* 

C. v/' 

O vP ° 

7 'S^ *» 

c> 'o’,;'* a, <" 

' a ^o a v o ° w c . y, 

S* • c-C*^V ^ 



0 ' P j~\ ° 

* «? 'P- o 

' ,<P y ' 

.G O 'o . » 

. i■• ^ 


^ — /V^7 


* o 

r . -r X ■) 















What Further Regulation of Inter¬ 
state Commerce is Neces¬ 
sary or Desirable 


AN ADDRESS BEFORE 

THE MINNESOTA STATE BAR ASSOCIATION 

AT DULUTH 


JULY 19, 191 1 

BY 

GEORGE W. WICKERSHAM 

ATTORNEY GENERAL OF THE UNITED STATES 


WASHINGTON, D. C. 






What Further Regulation of Inter¬ 
state Commerce is Neces¬ 
sary or Desirable 


AN ADDRESS BEFORE 

THE MINNESOTA STATE BAR ASSOCIATION 
AT DULUTH 


JULY 19, 1911 

BY 

GEORGE W. WICKERSHAM 

ATTORNEY GENERAL OF THE UNITED STATES 


WASHINGTON. D. C. 
1911 







5 .1 

\<\ \ \ 

,Wfc 


Gift 

Jhmy - >*' 

MA k \ t&H 



♦ ■ 

.*/ 




Gentlemen of the Minnesota State Bar Association: 

One of the most important questions—perhaps 
the most important—before the country to-day is 
that of the proper relation of the national govern¬ 
ment to corporations engaged in carrying on com¬ 
merce among the states and with foreign countries. 
The Sherman anti-trust law was held applicable 
to railroad companies in 1897, but the Interstate 
Commerce law of 1887 and the various amendments 
to it, particularly the Elkins law of 1903, the Hepburn 
act of 1906, and the Mann-Elkins law of 1910, have 
dealt so comprehensively and effectively with com¬ 
mon carriers by railroad, express, pipe line, telegraph, 
telephone, and to a certain extent by water, that but 
few civil suits have been brought against such carriers 
under the Sherman act, and—so far as I am aware— 
no criminal indictments have been found for violation 
of its provisions by railroad companies or other 
carriers. The gradual interpretation of the act 
of July 2, 1890, resulting in the decisions and decrees 
rendered by the Supreme Court at its last term, 
has at last clearly demonstrated the effectiveness 
of that law to destroy existing combinations in 
restraint of interstate or international commerce 
and attempts to monopolize any part of it, and to 
prevent renewed combination or monopolistic effort. 

The first practical application of the “rule of 
reason,” to combinations in violation of the anti- 


4 


trust law, made since the Supreme Court decisions 
in the Standard Oil and Tobacco cases, was 
that of the United States Circuit Court for the 
Third Judicial Circuit, in the Government’s suit 
against the so-called Powder Trust.* Certainly, 
no person interested in the maintenance of any 
monopoly or other restraints of interstate commerce, 
can derive comfort from the stern demonstration of 
unlawful combination contained in the court’s opinion 
in that case, or in the impending doom foreshadowed 
in its decree. 

“The recent decisions of the Supreme Court 
in Standard Oil Co. v. United States, and Ameri¬ 
can Tobacco Co. v. United States,” says Judge 
Lanning in rendering the opinion of the Court, 
“make it quite clear that the language of the 
anti-trust act is not to receive that literal 
construction which will impair rather than 
inhance freedom of interstate commerce. As 
we read those decisions, restraint of interstate 
trade and restraint of competition in interstate 
trade are not interchangeable expressions. There 
may be, under the anti-trust act, restraint of 
competition that does not amount to restraint of 
interstate trade, just as before the passage of 
the act there might have been restraint of com¬ 
petition that did not amount to a common law 
restraint of trade. * * * 

“While all this is true, the recent decisions 
of the Supreme Court make it equally clear that 
a combination cannot escape the condemnation 

*United States v. E. I. du Pont de Nemours & Co., et al, decided June 21, 
1911, U. S. Cir. Ct., Dist. of Delaware. 



5 


of the anti-trust act merely by the form it 
assumes or by the dress it wears. It matters not 
whether the combination be ‘in the form of a 
trust or otherwise,’ whether it be in the form of 
a trade association or a corporation, if it arbi¬ 
trarily uses its power to force weaker competitors 
out of business or to coerce them into a sale to 
or union with the combination, it puts a restraint 
upon interstate commerce and monopolizes or 
attempts to monopolize a part of that commerce 
in a sense that violates the anti-trust act.” 

In determining the form of decree to be entered, 
the Court said that the relief which it proposed to 
give was preventive and injunctive. 

“If our decree, limited to that purpose, shall 
necessitate a discontinuance of present business 
methods, it is only because those methods are 
illegal. The incidental results of a sweeping 
injunction may be serious to the parties immedi¬ 
ately concerned, but, in carrying out the com¬ 
mand of the statute, which is as obligatory 
upon this Court as it is upon the paties to this 
suit, such results should not stay our hand; 
they should only challenge our care that our 
decree be no more drastic than the facts of the 
case and the law demand. * * * The pre¬ 

sent decree will therefore be interlocutory. It 
will adjudge that the 28 defendants are main¬ 
taining a combination in restraint of interstate 
commerce in powder and other explosives in 
violation of Section 1 of the anti-trust act, that 
they have attempted to monopolize and have 
monopolized a part of such commerce in viola¬ 
tion of section 2 of that act, that they shall be 
enjoined from continuing said combination, 
and that the combination shall be dissolved. 
* * *>> 


6 


The decree further provided that in order that the 
Court might obtain such further information as 
should enable it to frame a final decree which should 
give effective force to its adjudication, a hearing 
should be given the parties in October next “as to 
the nature of the injunction which shall be granted 
herein and as to any plan for dissolving said combina¬ 
tion,” the defendants being enjoined in the mean¬ 
time from doing any acts to further extend or enlarge 
the field of operation or the power of the unlawful 
combination. 

Therefore, within such time as the ascertainment 
of facts and the preparation of evidence necessary 
to the initiation and conduct of appropriate pro¬ 
ceedings by the Government may require, such of 
the known monopolistic combinations in restraint 
of interstate trade and commerce as shall not vol¬ 
untarily dissolve, will be brought before the Courts 
for judgment, and the precedents furnished by the 
Standard Oil, Tobacco and Powder cases afford some 
assurance of the results which may be anticipated. 

But the question remains, can the great end and 
object of the Sherman law—namely, that the normal 
course of trade and commerce among the states 
shall not be impeded by undue restraints and mo¬ 
nopolies—be realized through the operation of that 
law alone? 

In dealing with transportation, Congress was 
not content to reply simply on the process of injunc¬ 
tion to restrain, and indictment to punish violations 


7 

of the anti-trust law. It also established an Admin¬ 
istrative Commission clothed with powers—greatly 
enlarged from time to time—over those engaged 
in the transportation business, which Congress 
enacted should be carried on for a reasonable com¬ 
pensation and without unjust discrimination as 
between parties or localities similarly situated. 
While Congress has not specifically incorporated 
corporations to carry on such business—save in a 
very few instances—nor directly licensed them to 
engage in interstate transportation, nor expressly 
exempted them from state interference, the Federal 
Courts have substantially held that Congress by 
regulating the rates and practices of common carriers 
in interstate commerce, has prohibited state regu¬ 
lation which would conflict with that of the nation. 
The decisions of the Federal Courts on this subject 
have not been always consistent, and in some in¬ 
stances state legislation has been allowed effect, 
despite apparent conflict with federal regulation of 
the same subject. But in the absence of direct 
Congressional exclusion of state law, or an avowed 
direct and exclusive license system, or system of 
national incorporation, the Courts have very prop¬ 
erly considered the susceptibilities of the states, and 
have upheld state legislation whenever it seemed to 
be not destructive of national control over the 
essentials of interstate commerce. 

A more frankly logical system would be, of course, 


8 


more satisfactory; but Congress—in common with 
other legislative bodies—is apt to shrink from taking 
a clear logical position in legislation which may in¬ 
volve conflict with other sovereignties or quasi¬ 
sovereignties, and to leave judicial interpretation to 
add to statutory authority a power the legislature 
was desirous to confer but feared to express. 

There are many reasons why a similar attitude 
may be expected when Congress comes to deal with 
the difficult problem of regulating the conduct of 
large commercial businesses among the states by 
corporations. 

The existing system, whereby every state charters 
corporations without the slightest regard to other 
states, or to the nation, empowered to roam at will— 
so far as their creator is concerned—but subject to 
any restriction or condition which any other state 
into which they may desire to go in carrying on their 
business chooses to impose, naturally led to a demand 
for authority in one corporation to take and hold 
stock in another, in order that the business of a cor¬ 
poration organized in one state might be carried on 
in another state, without subjecting the parent com¬ 
pany and its entire capital and corporate organiza¬ 
tion to the laws of the latter. Probably no one thing 
has done more to facilitate restraint of trade and the 
growth of monopoly than the departure from the 
early rule of law that one corporation cannot own 
stock in another. That departure was the most 


9 


baneful result of the laissez faire policy in dealing 
with corporations to which the country abandoned 
itself during the last thirty years of the nineteenth 
century. The conditions which have resulted from 
the exercise of the expressly conferred power in one 
corporation to take and hold stock in another, 
present the most serious obstacles to effectively 
dealing with the “trust” problem. For few, if any, 
corporations, solely by means of the direct acquisi¬ 
tion of property and the widening scope of their own 
business, have acquired such control of the particu¬ 
lar commerce among the states with which they are 
concerned as to constitute monopoly, or to threaten 
it. Whenever competitors have been excluded by 
unfair means, and a very large part of the commerce 
absorbed by a particular interest, the machinery by 
which such result has been accomplished will be 
found on examination to be the control of various 
corporations by means of intercorporate stock 
holdings. 

The cases of the Standard Oil, American Tobacco, 
the Powder Company, the American Sugar Refining 
Company, and others, furnish abundant judicial 
demonstration of this fact. 

In a large number of cases it has been sought to 
perpetuate the control secured by one corporation 
through the acquisition of stocks of other corpora¬ 
tions, by pledging such stocks as security for issues 
of notes or bonds; and enormous amounts of securi- 


IO 


ties have been sold to the public in faith of such 
pledges. 

If Congress should enact that no corporation 
engaged in interstate commerce shall hereafter 
acquire any stock of any other corporation so engaged, 
and that unless all such corporations should dispose 
of all stocks held by them in other corporations 
engaged in interstate commerce within some specified 
period they should be prohibited from carrying on 
interstate commerce until they did so dispose of 
such stocks, the axe would indeed be laid at the 
root of the trust evil; but justice to the innocent 
holders of securities issued to the public based on 
pledged stocks acquired and held pursuant to express 
legal* authority, would require consideration to be 
given to their case, and such exceptions to be made 
from the prohibition as might be necessary to their 
protection. These necessary acts of justice might 
seriously interfere with the enactment of legislation 
effective to the accomplishment of the main purpose 
in view. 

But such drastic legislation, while logical and 
effective, is hardly to be expected, and the question 
will therefore remain: Within what limits is legisla¬ 
tion to regulate corporations engaged in interstate 
commerce other than transportation expedient and 
practicable? Should the analogy of the Interstate 
Commerce law and Commission be followed? Is 
any regulatory legislation necessary besides the 


II 


vSherman act and the statutes prohibiting railroad 
rebates ? 

Conservative minds naturally shrink from accept¬ 
ing a conclusion which would devolve upon the 
national government the comprehensive powers and 
duties involved in extending the principles of the 
Interstate Commerce laws over commercial and 
industrial corporations, for the increased centrali¬ 
zation of control in Washington over the trade of 
the country, the multiplication of federal office 
holders and bureaucratic intermeddling with business, 
may be necessary, but are undesirable incidents to 
the conduct of daily business life. 

In deciding an act to provide for the purchase of 
a site and for the erection of a state elevator or 
warehouse at Duluth, for the public storage of grain, 
etc., to be in contravention of a constitutional pro¬ 
hibition against the state contracting any debts for 
works of public improvement, or to be a party in 
carrying on such work, one of the greatest of your 
Minnesota judges—William Mitchell—said: 

“ The time was when the policy was to confine 
the functions of government to the limits 
strictly necessary to secure the enjoyment of 
life, liberty, and property. The old Jeffersonian 
maxim was that the country is governed the 
best that is governed the least. At present, 
the tendency is all the other way, and toward 
socialism and paternalism in government. This 
tendency is, perhaps, to some extent, natural, 


12 


as well as inevitable, as population becomes 
more dense, and society older, and more complex 
in its relations. The wisdom of such a policy 
is not for the courts. The people are supreme, 
and, if they wish to adopt such a change in the 
theory of government, it is their right to do so. 
But in order to do it they must amend the 
constitution of the state. The present constitu¬ 
tion was not framed on any such lines.”* 

But the general power of the state to regulate 
business affecting the public was expressly recognized 
by Judge Mitchell in this language: 

“The right of the state, in the exercise of 
its police power, to regulate the business of 
receiving, weighing, inspecting, and storing 
grain for others, in elevators or warehouses, 
as being a business affected with a public 
interest, is now settled beyond all controversy. 
This power extends even to fixing the charges 
for such services. * * * 

“And where a business is a proper subject of 
police regulation, doubtless, the legislature may, 
in the exercise of that power, adopt any measures 
they see fit, provided only they adopt such as 
have some relation to, and have some tendency 
to accomplish, the desired end; and if the 
measures adopted have such relation or tendency 
the courts will never assume to determine 
whether they are wise, or the best that might 
have been adopted.”! 

That some further regulation over corporations 
carrying on commerce among the states may be 

*Rippe v. Becker, 56 Minn., 100, 118. 
fid., p. 108. 



13 


necessary, is a matter of current comment. It has 
been openly advocated by representatives of some 
of the largest combinations of capital, perhaps as a 
means of salvation, and to preserve under govern¬ 
ment supervision, great organizations whose con¬ 
tinued existence is menaced by the recent interpre¬ 
tation of the Sherman Act, and the disintegration of 
which would be necessarily attended with much loss. 
To such it is a case of “ any port in a storm.” Better 
continued co-operative life, even under a powerful 
master, than disseminated properties and segregated 
activities without constant governmental supervision. 

But there are other reasons for such regulation. 
The Federal Department of Justice is not organized 
or equipped to maintain constant supervision and 
control over business organizations. It deals only 
with cases of violation of the law. The activities 
of an administrative board or commission would be 
directed to preventing such violations, and in aiding 
business men to maintain a continued status of 
harmony with the requirements of law. 

Moreover, unless Congress shall provide for the 
establishment of corporations drawing their life and 
powers only from the national government, and sub¬ 
ject only to its control, or shall confer specific powers 
on state corporations which will enable them to 
carry on commerce away from the state of their 
creation, without the interference of states into 
which they go, the present unsatisfactory condition 


14 


of carrying on business in the different states by 
means of many different corporations owned or con¬ 
trolled through stock ownership by a parent company 
created by some one state will continue, and in the 
natural, normal, healthy and legitimate growth of 
such business, questions of the application of the 
Sherman law must arise which cannot be properly 
settled with the District Attorney or the Department 
of Justice, but which should be dealt with by an 
administrative body having appropriate jurisdiction. 

There are still further considerations involved in 
the question. The tendency of this age is toward 
co-operation in every field of activity. The early form 
of co-operative business effort by means of partner¬ 
ships was found insufficient for large enterprises, 
because of the unlimited liability imposed on the 
partners, and the inelastic character of the invest¬ 
ment. The great commercial development of the 
country would scarcely have been possible but for 
the introduction of co-operation in the form of cor¬ 
porations for business purposes in the early part of 
the nineteenth century. The growth of the incor¬ 
porated companies, the development of close relations 
between them by agreement, and through reciprocal 
stock ownership, so unified their power and extended 
their control that their employees were driven to 
co-operative association for protection against the 
suppression of their rights, and for the purpose of 
compelling better recognition of their claims to larger 


15 


recognition in the division of profits. The problems 
of modern commercial life are vast. They affect not 
only employer and employed, but the public. Facili¬ 
ties of transportation and for the transmission of 
intelligence have brought all parts of the world into 
close touch. Any economic disturbance in one part 
of the country affects to a greater or less extent every 
other part of the country. Common needs have 
developed, and commodities of many kinds are 
standardized. Prices should be reasonable. Destruc¬ 
tive competition, while it is attended with abnormally 
low prices never produces reasonable prices. Indeed, 
abnormal price is one of the indicia of monopoly. 
Fair competition is essential to healthy national 
life, but it is more than doubtful whether or not there 
can be fair competition without concert of action or 
co-operative effort to some extent. Business men of 
integrity are naturally desirous of avoiding violations 
of law. The construction of the Sherman law origi¬ 
nally contended for would have condemned them for 
any concerted action which imposed any restraint 
on trade. The more enlightened view which has been 
expressed by the Supreme Court limits the prohibi¬ 
tion to undue restraints—those which are not the 
result of normal business methods, but which are 
intended to accomplish, or have for their direct and 
primary purpose, interference with the natural course 
of trade and commerce among the states or with 
foreign countries. Yet even within these rules there 


i6 

is an area of activity where co-operation and associ¬ 
ation should only have play under government 
supervision and control. 

With such supervision, a natural economic force 
may be utilized to the public benefit and to the 
general satisfaction of the commercial world. By it, 
while monopolies and restraints of trade will still be 
held at bay by the terrors of the anti-trust act, 
thousands of small traders may by regulated co-oper¬ 
ation protect themselves from the ruin of destructive 
competition on the one-hand, and from the constant 
apprehension of indictment on the other. 

Whether or not such a Federal Industrial Com¬ 
mission should have power to regulate prices, is of 
course a matter for serious consideration. The 
Interstate Commerce law prescribes as a legislative 
rule that prices for transportation by rail, or wire, 
or pipe line, shall be reasonable, and that no unjust 
discrimination shall be made between individuals or 
localities similarly situated. It leaves it to the Com¬ 
mission to determine when this legislative standard 
is departed from and to take proceedings appropriate 
to compel compliance with it. A similar rule might 
be declared by Congress with respect to the prices 
of commodities the subject of interstate commerce. 

We have become accustomed to the regulation 
of rates of transportation, but the suggestion that 
prices of commodities be regulated by Congress seems 
novel and radical. Yet the principle on which the 


17 


regulation of transportation rates is based is simply 
that when property is used in a manner to make it of 
public consequence and affect the community at large 
it becomes clothed with a public use, and may be 
controlled by the public for the common good. In 
the early days in some parts of this country statutes 
were enacted to regulate the business of millers and 
the rates they might charge for grinding. At that 
time it was a matter of public concern that every 
farmer should have the right to have his corn ground 
at a reasonable rate. So to-day the conduct of the 
great commerce in staple articles among the states 
is become a matter of public consequence, and the 
courts have upheld legislation regulating it by pre¬ 
scribing some of the conditions under which it may 
be carried on. To require as one of these conditions 
that prices for commodities dealt in in interstate com¬ 
merce must be reasonable, only involves a new appli¬ 
cation of the same principle. 

Indeed, unless prices be dealt with under such a law, 
it would fail to reach the essential evil; for “unified 
tactics with regard to prices’’ has been authorita¬ 
tively declared to be the essence of modern monopoly, 
and as was said in the case of National Cotton Oil Co. 
v. Texas {197 U. S. 115-129), “It is the power to con¬ 
trol prices which makes the inducement of combina¬ 
tions and their profit. It is such power that makes 
it the concern of the law to prohibit or limit them. ” 
But again, it is said that legislative control of prices 


smacks of medieval sumptuary legislation and is 
foreign to the genius of our institutions. Students of 
Adam Smith are taught to believe that the natural 
price of an article is that which is fixed by the opera¬ 
tions of the natural unrestrained law of supply and 
demand, working without any artificial restraint. 
The anti-trust legislation of the United States and 
of most of the states is based upon this theory. It 
is said in “The Wealth of Nations:” 

“The price of monopoly is upon every occa¬ 
sion the highest which can be got. The 
natural price, or the price of free competition, 
on the contrary, is the lowest which can be 
taken, not upon every occasion, indeed, but for 
any considerable time together.”* 

But the fact is that the law of supply and demand 
does not and has not for many years worked in this 
country in a natural unrestrained and unfettered 
manner. The government, in the first instance, 
interposes an artificial restraint in the protective 
tariff on imports. True, the theory of this tariff 
is to equalize conditions of competition; to place, 
as it were, a handicap on the foreign competitor 
who has produced his commodities under conditions 
less burdensome than those under which the American 
manufacturer produces his. But, in fact, the inequali¬ 
ties resulting from the methods of tariff legislation 
are very often impossible to justify on the theory of 


*Ld. Geo. Bell & Co., London and New York, 1896, Vol. I, p. 62. 




19 


sufficient protection only, and the resulting price is 
that fixed by a limited competition between dealers 
in the market from which foreign competitors are 
to a certain extent excluded. Nor is this all: It is 
probably safe to say that in almost every one of the 
great staple industries, prices have been for years 
fixed by agreement between the principal producers, 
and not by the normal play of free competition, 
even among the domestic producers, nor by the 
unfettered operation of the law of supply and demand. 

Take, for instance, the facts concerning the powder 
and explosive business, as found by the United States 
Circuit Court in the recently decided case to which 
I have already referred. 

‘"The record of the case now before us” 
said Judge Tanning in that case “shows that 
from 1872 to 1902, a period of thirty years, the 
purpose of the trade associations had been to 
dominate the powder and explosives trade in 
the United States, by fixing prices, not according 
to any law of supply and demand, for they 
arbitrarily limited the output of each member, 
but according to the will of their managers. 
It appears, further, that although these associa¬ 
tions were not always strong enough to control 
absolutely the prices of explosives, their purpose 
to do so was never abandoned. Under the last 
of the trade association agreements—the one 
dated July 1, 1896, and which was in force until 
June 30, 1904—the control of the combination 
was firmer than it had before been. Succeeding 
the death of Eugene du Pont in January, 1902, 


20 


and the advent of Thomas Coleman du Pont and 
Pierre S. Du Pont, the attempt was made to 
continue the restraint upon interstate commerce 
and the monopoly then existing by vesting, in 
a few corporations, the title to the assets of 
all the corporations affiliated with the trade 
association, then dissolving the corporations 
whose assets had been so acquired, and binding 
the few corporations owning the operating plants 
in one holding company, which should be able 
to prescribe policies and control the business of 
all the subsidiaries without the uncertainties 
attendant upon a combination in the nature 
of a trade association. That attempt resulted in 
complete success 

For years, the Court said, trade agreements 
between all manufacturers of powder and explosives 
in the United States have been in existence. There 
were times when the parties to these agreements 
broke away from and disregarded them, but usually 
the fines and penalties imposed on the violators were 
effective to protect and effectuate them. The Court 
says: 


“On October 26, 1897, an agreement was en¬ 
tered into by ten American manufacturers, 
eight of whom were parties to the agreement of 
July 1, 1896, and two European manufacturers, 
which related to explosives of all kinds, provided 
that the European parties should not complete 
works then building in New Jersey, and that 
the American parties should bear all expenses 
theretofore incurred in connection therewith, con¬ 
tained mutually restraining provisions as to the 
erection of factories in the United States and 


21 


Europe, divided the trade of the world territorially 
between the American and the European parties, 
contained provisions for fixing prices, provided 
a fund for the purpose of protecting the common 
interest against outside competition, fixed fines 
and penalties for breaches of the agreement, and 
contained sundry other provisions for the regu¬ 
lation and control of the trade. This agreement 
was in existence throughout the period of the 
war with Spain and until 1906. ” 

It was succeeded, as shown by the first quotation 
from the opinion, by a more perfect combination, 
by which prices were absolutely fixed and which 
continued to the time of the decree. 

A large number of indictments recently found 
in the Southern District of New York were based 
upon evidence of the continued existence during 
a number of years, and until a recent date, of pools, 
or associations of manufacturers of various kinds of 
wire, under which official and noncompetitive prices 
were fixed, determined, agreed upon, and maintained. 

The fact seems to be, that the prices of many 
standard articles of consumption sold in the United 
States for a number of years past have not been fixed 
at all by the operation of the laws of supply and 
demand or by unrestrained competition, but by asso¬ 
ciations of the producers, without the participation of 
the consumer or the general public—that is, without 
those who have had to pay the bill having any voice 
in fixing the price. In this view, it is certainly not 
unreasonable that the purchasing public should desire 


22 


to have some part in determining the price it is to 
pay—in like manner as has been recognized to be 
just with respect to the cost of transportation. 

If there could be any assurance that the free play 
of competition would be assured, and the natural 
price resulting from the unrestrained operation of 
supply and demand maintained, then no govern¬ 
mental supervision of business—beyond occasional 
prosecutions for violations of the Sherman law— 
would be necessary. But the habits formed through 
years of following a system are not easily shaken off, 
and the artificial forms of organizations made 
necessary by the conflicting laws of many states 
with those of the nation, will always present a border 
land of doubt, which will furnish, on the one hand, 
opportunities for those who wish to violate the law 
to do so with some show of justification; and on the 
other, to perplex those who are sincerely desirous 
of keeping the law, but by reason of the complexity 
and conflict of different state laws, find it difficult to 
do so without seeming to run counter to the anti-trust 
law. For the effectual regulation of both of these 
classes the supervision of a federal commission is cer¬ 
tainly desirable, if not absolutely necessary. 

In theory it would seem that such a commission 
should have some power over prices, but the practical 
difficulties in the way of exercising such power so as 
not to inflict a greater evil than that it is intended 
to cure, are so great as perhaps to be insurmountable 


23 


It would be well nigh impossible to fix a maximum 
price which would not be, on the one hand unjust to 
the small producer, and would not on the other hand 
increase unduly the profit of the large producer. 
For the large producer with an adequate supply 
of raw material and the economies and efficiencies 
only possible with a large organization, can always 
afford to sell at prices which would be ruinous to the 
small producer. 

These problems go to the very root of the con¬ 
tinued prosperity of our people. They can only 
be solved by a careful consideration free from any 
partizan bias. I have not attempted to express a 
conclusion, but merely to state the elements of a 
problem which if wisely determined, will “scatter 
plenty o’er a smiling land, ” and if unwisely dealt with 
may paralyze the hand of industry that maketh 
rich—not with the unequal wealth of monopoly, but 
with the distributed wealth which brings national 
prosperity and continued peace. 






















































































. 












































. ( 


■ 

' ! Jfc wA 









f ,-."V 

, 


■ W'ftUffi •' r "f 
-il-Vj A v.' \lf 




I , , " 




1 • % •«. ' 

nw&ft 

/ . 






• i’ .1- ' •' 






X ' 







































\r *y 




-«> *-•■\/ V'®'/ \‘‘ Y: ’•’/=..;% 

^ V ** *% V, <9^ * y * ®- A V 

'. V A .vWa*. ♦* ^ • 

A* A . A\V?1//A° Vv ° 

* «/ ^ o V* A/ *$V 

/ i , i ^ , '-‘'/ <a^’a a '•-*• ^ 



a<* 


£> N 0 


V • O 



? <> 



*' A>** 

* 4^ V 




^ * C 
-o V* • 



c 


0 . y * 


/ 





</> 

«f» 

«l> 

% * 0 " 0 ,J 
V 

* ^ <£ 

- vP G 

* A^’A 

* A > ^V • ’Jk/lUlfvZ' * A? o 

A <\ *'..* ’ A O 

G o * C <£ ^ v # t I a ^ 

^ c 1 


s q 



o' 


• <A A / 

: W ; 

• ^ >. • 




* *7 r j. . 

« A 


o 



A 'o . * * 

V 

* ° <y s 

- ^ : . 

O \0 *7*. v 

•vv^v A A ‘AT 

* V A , : —- > V 

: As#/. A ” ~ Mj ' 

AV j ^S^“ A V “ 

,* v <?> AJE?,* >• x>, •’■■' 

A <\ *'.. <* A A '».. ■ 

A c o * ° , <^ O’ . • ‘ '* - O 

G ^ • 

xy A 

- o V 



> V > .* * tnL'* C' 


. ^ y > 

* ^o .° ^ 

0 ,0 ^ ^ 

.' r. * **- '- 

’" o ; ^ *••.'• . 

V u * _ A 



0 








<0* A*°' > 


“ 0v Vv V 
'V ^ 


G v 'o^ -o. K - ^ 




<\ ' . . s V 

t> A^ V G 0 ~ ° ^ . 0^ 

% ° /-gSS&fC* ^ , 0 

* O v . i V' * A cr 

iP-n^ £ °"' V€®^« 

^ snst- * o ^u> * 4,y c " -- s ^:* 

°* *•■»’ a° ^ *••’• y 

. ^ A 0 ' .-H'. ' > , . v 'V-. A° 


A ^ O < 


& “ L 

,0 f. y • ®* 

^ y 

-# • SI : ^ 


-J 


% G' 'o "o. * * A 



\ 



L ' * - O A 

O J^P- 

, ,, , 1> \ » ^ 

- l> b ^ 


0 0 * 0 * 


C>. *o«o 5 . 0 


0 


^° •V . 



L > <£» 






.. 


'tf' ,<^ 

^r> ^ * 


y Vv V : 


\ 


*V 






y * ✓ v - * - 


• ^ bV . 

*■ -S' S' * 


° A * < 

° ^ >( {V 



4 


X-> 


o 'o . * " A 


*P 


*-7'/.* A v 

G V o ° N 0 -» o V * L • B -» o 

^ "A, G A’^p/r??'. 2.. ■’’ ^ , 

v ’ 7 'j. , v * jp/ 7 //AA •* < 

« ^*0^ ^ A 


■cl5"' 




A o - c <Ji 
. 0 ^w> <- *f> 

-y 


o » » 


^ < l 

o V 


N <A/ “> 

, * w -,* A cv ^ . o 

^ * * 41 ‘ A> 410 w 0 ^. 0 

* - ■ rv — “V A ✓ * 

<* vVk •* 

•■ a y 


i 0 ' 7 *-#- 



G’ 


u ' « 




q 



?y°^ 


° ^ A*^ * 

r. **<? : 

* G^V -. 




r^ ' if 

^ ’ * /' °°^ " * 5 " ° 1 
' > v ^ v o' .m 

* * v * nMA. ,A 




« L ' ° -9 O 



aV-*> - 1 ^iiiia^^ ° A “ A^y> 

/ $ %> ^ V 4 ^ 

* A <, *'..<* .O'* O '®.A A <y '».* 

A^ . C J^A ^ r 0 ^ A^ .°°" c " ^ ’ 

<*^ o' A * x ^ 0 ^ o' 


o v 


* D N 0 0 <0 




\ o -TV 

>• ^ * 
0 


£ 


.0 v", - # ^ c> 

0 y ‘^•' y h %*'• ^ ’’ y 

O’ A* A V .*L^L% C\ 0 A*°' ^ V s 

*• V> A¥a^ V VJK “ 




° V ♦ 

E W ! 



vP G 


^ V 


cG ° 

* V* > &, ° 

► <L V * kS ^ •* v- v 

0 v O -o . A A 

p. V . I ' « * V V 0 » 6 - 

r, U -r O ,i*fr .Gr^xx . <" 'P 

























d* >» • <ir o 

a %. *"'* ^ * 

^ v * ’ * °. b «<y v s V.'* *> 


'...** ^ %. *'?Vi* ■ <% 

-(T C 0 " 0 « ^o , I / » '<£. 

r r * -r^tv *“ O A >_/*■**_*„ ^ 


**0< 


-S vP 

* ^ * 

< «- V 

a° Kr *'V,'A A 

' C 0 ' 0^1° * ^o *<&> .t>*„ <* 


<b '• • * * <6^ *o * 

> /> N S3 ^ 


b <-s 

* 'f s 

0 aV-^> 

* -y %■ 


\y A 

o V 


tt>0* 


* 


c ' . * CJ 

^ v. .c ^ 

0 

^° ^ o o5 °^ * 

%. *•-’•' a 0 ' U/A^’A °o *».,,• 

’**- '>. ,-j? . ^ ., ,v %. , v t . 




<* o ^ 1 

* <N * 

w» V>* < y’ ^ 

. > 


< 



■W 







u 

.VA, 

A *£* ° 

, V \* 

w ^ 0 N G /, ^Q < ^ ^ L / B •<£ 

0 * v) .1^ 

V 


*9 ^ 

* rs * 

^ n 0 C^ ^ 

A 0 < 5 ^ * 0 N 0 

0 sV**^ X> \ 

"= ^ A * 





b. A> 
%■<& 


*o ♦ * * .0 



W» \^A < tV *» 


b V 1 



T ^ 


* ^ 0^ 


A * ts ^ ^ > ^ r X ri^ 

<\ 'o ^ A * ^ ^ ^ 

< ^ > l t 8 <P 

A '#<mk A, 

- A ’ v»„ <■ 

0 v", *. 4^^S^\7 o < 25^ - ^A%4m£:ii * \0 ^ ’ < o 

o * fAAA* o ^ 

s ,., V- ■• 4 V <P B " >> f M0’ / 

-fSSfef* ^ x .'aVa*. ^ A ' 


* vP 

«* / b 





» / 1 


^ ^ ♦ rA%■;/ a!° ^bp ^ ♦ V 'fSf 

b'V - ^ s b 

v V^ 

O.V - ^vT^V ^ 

O * ^ " ,0' \3 v 

0 V c 0 " c -» ^o 


' \ V fW 


/s ^ 

V 1 °5> 



V' * Y *o 


A A 
vr*<^ % 


* /. 


^ c 


** A A ^-?- 

^ <\ ^ ',*;**' A & a ^ 

^ L ,. b -* A ... °* ’'•••’ ^ 



b 

























